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Court Abused Its Discretion In Exercising Its Inherent Power to Grant a Motion to Vacate a Default Judgment More than a Year After the Judgment Was Entered (Five Years Here)

The Second Department determined Supreme Court should not have exercised its inherent power to vacate a default judgment more than one year after the judgment was entered (five years here):

Pursuant to CPLR 5015(a)(1), a court may relieve a party from a judgment on the ground of excusable default, if a motion for that relief is made within one year after service of a copy of the judgment with written notice of entry (see CPLR 5015[a][1]…). In addition, even after expiration of the one-year limitations period set forth in CPLR 5015, “a court may vacate its own judgment for sufficient reason and in the interests of substantial justice”… .

Here, to the extent the defendant sought to vacate the judgment against her pursuant to CPLR 5015(a)(1), that branch of her motion was untimely because it was not made within one year after service upon her of a copy of the judgment with notice of entry (see CPLR 5015[a][1]… ) . Further, contrary to the Supreme Court’s conclusion, the interests of substantial justice did not warrant vacating the judgment against the defendant in the exercise of the court’s inherent power … . Yung Chong Ho v Uppal, 2015 NY Slip Op 06132, 2nd Dept 7-15-15

 

Failure to Enter a Default Judgment within One Year Justified Dismissal of the Complaint as Abandoned

The Second Department determined, pursuant to CPLR 3215 (c), plaintiff’s failure to enter a default judgment within one year, and plaintiff’s failure to explain the delay, warranted dismissal of the complaint as abandoned. The court explained the reasons for the rule:

CPLR 3215(c), which is entitled “Default not entered within one year,” states, as relevant to this appeal: “[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed.” The policy underlying the statute is “to prevent parties who have asserted claims from unreasonably delaying the termination of actions, and to avoid inquests on stale claims” … . Upon a showing of the requisite one year of delay, dismissal is mandatory in the first instance … . Failure to take proceedings for entry of judgment may be excused, however, upon a showing of sufficient cause. To establish “sufficient cause,” the party opposing dismissal must demonstrate that it had a reasonable excuse for the delay in taking proceedings for entry of a default judgment and that it has a potentially meritorious action … . Here, the Supreme Court correctly granted that branch of [defendant’s] motion which was pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against her. [Defendant] demonstrated that the plaintiff had failed to take any proceedings for entry of judgment within one year after she defaulted, and the plaintiff failed to demonstrate sufficient cause why that branch of the motion should be denied. Aurora Loan Servs., LLC v Hiyo, 2015 NY Slip Op 06100, 2nd Dept 7-15-15

 

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Court of Claims Must Determine the Interests of All Parties Named by the Attorney General as Potentially Entitled to Payment for a Taking by the State—Therefore a Claimant Must Join all the Parties Named by the Attorney General

The Second Department explained the procedure under the Eminent Domain Procedure Law (EDPL) for determining how to apportion payment for a taking when there is a dispute about which parties are entitled to payment. Under the EDPL and the Court of Claims Act, the Court of Claims must determine the interests of all parties named by the Attorney General as having a possible claim. Therefore a claimant must join all the named parties in any action seeking payment:

EDPL 304(E)(1) … provides that when the Attorney General determines that there is a conflict with regard to the person or persons legally entitled to receive payment for the value of property acquired by the State through the power of eminent domain, he or she shall request the Comptroller to deposit the funds in an interest-bearing account “to be distributed as ordered by the Court of Claims on application of any person claiming an interest in the amount” (EDPL 304[E][1]). The statute further provides that the procedure to be employed in connection with such an application “shall be the same as provided in [Court of Claims Act § 23],” and that “[n]o judgment of distribution shall be made unless the court shall first obtain personal jurisdiction over all persons certified by the Attorney General as having or claiming to have an interest in the fund” (EDPL 304[E][1]).

The claimant argues, in effect, that Mazur Brothers, Inc. (hereinafter MBI), an entity that the Attorney General has determined has a possible interest in the subject proceeds, does not in fact have any such interest and that, therefore, the claimant was under no obligation to join MBI as a party to this claim. In advancing this argument, however, the claimant essentially asked the Court of Claims to assume the very fact that is the ultimate fact that must be proven, namely, that MBI has no interest in the money deposited by the Comptroller. Without jurisdiction over MBI, it would have been improper for the Court of Claims to grant the relief requested by the claimant in connection with this claim. Indeed, as the claimant appears to have recognized, its remedy, under these circumstances, lies in a special distribution proceeding pursuant to EDPL 304 … . Mazur Bros. Realty, LLC v State of New York, 2015 NY Slip Op 06119, 2nd Dept 7-15-15

 

Best Interest of the Incapacitated Person Justified Removal of Guardian of Person and Property

The Second Department determined Supreme Court properly exercised its broad discretion in granting the cross-motion to remove the guardian of Helen S.’ person and property (pursuant to Mental Hygiene Law 81.35). Helen S. testified that the guardian yelled and screamed at her, made her very nervous and upset causing her body to shake, and causing her to throw up. The court explained the relevant analytical criteria:

A guardian may be removed pursuant to Mental Hygiene Law § 81.35 when ” the guardian fails to comply with an order, is guilty of misconduct, or for any other cause which to the court shall appear just'” … . “The trial court is accorded considerable discretion in determining whether a guardian should be replaced,” and the “overarching concern remains the best interest of the incapacitated person” … .  Matter of Helen S. (Falero), 2015 NY Slip Op 06153, 2nd Dept 7-15-15

 

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Service of an Unverified Petition in Violation of the Court of Claims Act Did Not Constitute a Jurisdictional Defect

Reversing the Court of Claims, the Second Department determined that service of a petition which was not verified was not a jurisdictional defect in a proceeding to recover money placed in escrow by the NYS Comptroller pending claims for the state’s appropriation and use of easements.

In accordance with the Eminent Domain Procedure Law, after the Attorney General determined that there was or might be a conflict with regard to the money allegedly owed as a result of the extended use of these temporary easements, the funds were deposited by the New York State Comptroller into a special interest-bearing eminent domain account (see EDPL 304[E][1]). Upon receiving notice of this deposit, the petitioner commenced this special proceeding for the distribution of the money pursuant to EDPL 304(E)(1) and Court of Claims Act § 23. The State promptly rejected the petition, noting that it was served without a proper verification. Within days, the petitioner provided the missing verification. The Court of Claims, however, dismissed the petition, concluding, inter alia, that the failure to comply with the statutory provisions requiring verification constituted a jurisdictional defect that mandated dismissal, without consideration of the merits. The petitioner appeals, and we reverse.

While the time limitations and service requirements set forth in Court of Claims Act §§ 10 and 11 have been referred to as “jurisdictional” … , the instant matter concerns a special proceeding pursuant to EDPL 304(E) for the distribution of money that had been deposited (see Court of Claims Act § 9[12]), and service of the petition without a verification did not constitute an incurable “jurisdictional” defect … . In this regard, the petitioner, upon notice from the State, cured the omission within a matter of days (see CPLR 3022, 3025[a]…). Moreover, considering that no substantive right of the State was prejudiced by the missing verification, even if the omitted material had not been supplied, the Court of Claims, under the circumstances presented to it, should have disregarded the technical infirmity pursuant to CPLR 2001 and 3026 … . Matter of Mazur Bros. Realty, LLC v State of New York, 2015 NY Slip Op 06149, 2nd Dept 7-15-15

 

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Constructive Trust Cause of Action Did Not Accrue When Defendant Acquired the Subject Property (In 1995 or 1996), But Rather When Defendant , Who Had Properly Acquired the Property, Breached Her Promise to Transfer an Interest in the Property to Plaintiff (In 2012)

In finding the constructive trust cause of action should not have been dismissed as time-barred, the Second Department explained that a cause of action for a constructive trust accrues (1) when the constructive trustee acquires the property wrongfully, or (2) when the constructive trustee wrongfully withholds property which was lawfully acquired but was to be transferred:

A cause of action “for the imposition of a constructive trust is governed by the six-year Statute of Limitations of CPLR 213(1), which starts to run upon the occurrence of the wrongful act giving rise to a duty of restitution” … . “A determination of when the wrongful act triggering the running of the Statute of Limitations occurs depends upon whether the constructive trustee acquired the property wrongfully, in which case the property would be held adversely from the date of acquisition, or whether the constructive trustee wrongfully withholds property acquired lawfully from the beneficiary, in which case the property would be held adversely from the date the trustee breaches or repudiates the agreement to transfer the property” … .

Here, the gravamen of the plaintiff’s cause of action for the imposition of a constructive trust is not … that the defendants wrongfully acquired the subject properties in or around 1995, or 1996, but rather that subsequent thereto, sometime in 2012, the defendant… breached her promise to the plaintiff that they would be equal partners with respect to those properties … . Barone v Barone, 2015 NY Slip Op 06102, 2nd Dept 7-15-15

 

Arbitrator’s Award Should Not Have Been Vacated—No Clear and Convincing Evidence of Arbitrator’s Bias or Misconduct or that the Arbitrator Exceeded His Power

The Second Department reversed Supreme Court’s vacation of an arbitration award. The vacation was based in part on a finding of an appearance of bias on the part of the arbitrator. The motion to vacate the award alleged the fact that both the mediator and arbitrator were past Supreme Court justices with overlapping terms demonstrated the arbitrator’s bias or the appearance of bias.  The Second Department explained the limited role of a court in reviewing an arbitrator’s award and noted that any ground for vacation must be proven by clear and convincing evidence:

“It is well settled that judicial review of arbitration awards is extremely limited” … . “A party seeking to overturn an arbitration award on one or more grounds stated in CPLR 7511(b)(1) bears a heavy burden, and must establish a ground for vacatur by clear and convincing evidence” … .

An arbitrator’s partiality may be established by an actual bias or the appearance of bias from which a conflict of interest may be inferred … . * * * [T]he fact that both the mediator and arbitrator were former Supreme Court Justices who served overlapping terms …, standing alone, did not constitute clear and convincing evidence of actual bias or the appearance of bias on the part of the arbitrator … . Moreover … [the movant] failed to present clear and convincing evidence that the arbitrator exceeded his power in issuing the award (see CPLR 7511[b][1][iii]), or that he engaged in misconduct … . David v Byron, 2015 NY Slip Op 06107, 2nd Dept 7-15-15

 

Court Has No Inherent Power to Vacate a Notice of Lien Which Is Valid on Its Face—Validity of Lien Must Be Determined in Foreclosure Proceeding

The Second Department noted that a court has no inherent power to vacate a notice of lien which is valid on its face. Determination of the validity of the lien must await trial by foreclosure:

A court has no inherent power to vacate or discharge a notice of lien except as authorized by Lien Law § 19(6) … . Lien Law § 19 enumerates the grounds for the discharge of a mechanic’s lien interposed against a nonpublic improvement … . Where, as here, the notice of lien was not invalid on its face, any dispute regarding the validity of the lien must await trial thereof by foreclosure … . Rivera v Department of Hous. Preserv. & Dev. of City of New York, 2015 NY Slip Op 06126, 2nd Dept 7-15-15

 

Custody Properly Awarded to Non-Parents—Criteria Explained

The Second Department affirmed Family Court’s award of custody to non-parents, explaining the relevant criteria:

In a custody proceeding between a parent and a nonparent, the parent has a superior right to custody that cannot be denied unless the nonparent establishes that the parent has relinquished that right due to surrender, abandonment, persistent neglect, unfitness, or other like extraordinary circumstances … . The burden is on the nonparent to prove the existence of extraordinary circumstances … . Where extraordinary circumstances are found to exist, the court must then consider the best interests of the child in awarding custody … .

Here, the Family Court properly determined that the nonparent petitioners, Yasmin Culberson and Walter Culberson, sustained their burden of demonstrating extraordinary circumstances based upon, inter alia, the mother’s prolonged separation from the subject child and lack of significant involvement in the child’s life for a period of time, the mother’s failure to contribute to the child’s financial support, and the strong emotional bond between the child and the nonparent petitioners … . Moreover, the Family Court’s determination that an award of custody to the nonparent petitioners would be in the best interests of the child is supported by a sound and substantial basis in the record … . Matter of Culberson v Fisher, 2015 NY Slip Op 06144, 2nd Dept 7-15-15

The Third Department determined grandmother demonstrated extraordinary circumstance justifying the award of custody to her with visiting rights for the parents. The court explained the relevant analytical criteria:

“It is well settled that a parent has a claim of custody of his or her child, superior to that of all others, in the absence of surrender, abandonment, persistent neglect, unfitness, disruption of custody over an extended period of time or other extraordinary circumstances” … . “The burden of proving such extraordinary circumstances rests with the nonparent seeking custody and, if established, the controlling consideration in determining custody is the best interests of the child” … . Proof regarding extraordinary circumstances may include, among other things, that “the parent has neglected ‘to maintain substantial, repeated and continuous contact with’ the child[] or make plans for [her] future” …. . Matter of Yandon v Boisvert, 2015 NY Slip Op 06177, 3rd Dept 7-16-15

 

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Specific Disclaimers Indicating No Information Extrinsic to the Written Contract Was Relied Upon Precluded Fraud in the Inducement Cause of Action/Summary Judgment on Promissory Note Precluded—Breach of Contract Cause of Action Was Intertwined with Promissory Note

In a decision addressing many other issues, the Second Department determined specific disclaimers in the contract indicating nothing extrinsic to the contract was relied upon by the parties precluded any claim alleging fraudulent inducement.  The court also noted that plaintiff was not entitled to summary judgment on a promissory note because the note was intertwined with the breach of contract cause of action:

“While a general merger clause is ineffective to exclude parol evidence of fraud in the inducement, a specific disclaimer destroys the allegations in [a] plaintiff’s complaint that the agreement was executed in reliance upon . . . contrary oral [mis]representations'” … . In support of this branch of their motion, [defendant] relied upon the contract, which provides that [defendant] made no representation or warranty, either express or implied, as to the assets sold, [defendant’s] business, or “any matter or thing affecting or relating to this agreement, except as specifically set forth in this agreement.” The contract also indicates that it contains all of the terms agreed upon between the parties and that it was entered into after full investigation. Such clauses are sufficiently specific to bar the [plaintiffs] from claiming that they were fraudulently induced into entering the contract because of certain oral misrepresentations … . * * *

Although the breach of a related contract generally cannot defeat a motion for summary judgment on an instrument for money only, that rule does not apply where the contract and instrument are intertwined … . Here, the action to recover damages for breach of contract is sufficiently intertwined with the action to recover on the promissory note, such that denial of summary judgment to enforce the promissory note and personal guaranty was proper … . Oseff v Scotti, 2015 NY Slip Op 06123, 2nd Dept 7-15-15

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